Projects for NHS providers: changing, growing and improving

Date published

15/06/2016

Sectors

Locations

We shall never have all we need. Expectation will always exceed capacity. The service must always be changing, growing and improving – it must always appear inadequate.(Aneurin Bevan, 1948)

In the current public funding landscape, Bevan’s proclamation seems more pertinent now than ever to the providers of healthcare in the NHS. The rapid progress in treatments and medical research, the development and redesign of clinical pathways, technological evolution and the ever-increasing demand for healthcare from an ageing population results in a system in constant need of change.

Alongside delivering the Quality, Innovation, Productivity and Prevention (QIPP) agenda, implementing the Five Year Forward View and Lord Carter’s recommendations, NHS providers share a common desire to provide modern and efficient facilities and equipment and develop lean working practices to allow their clinical workforces to deliver services to their patients in the most effective manner possible.

Further efficiencies: how far can we go?

NHS providers are working, often alongside professional advisors and private sector partners, to identify projects - from the complex to the simple – that will help them to deliver better and more efficient services for their patients. These projects include:

  • Estates planning exercises – promoting better and more efficient use of space and disposing of surplus land parts of sites for capital receipts.
  • Identifying partnering opportunities with the private sector for developing or redeveloping estate and facilities and associated opportunities for third party funding.
  • Contract rationalisation – reviewing contracts and their contract management to ascertain if they are being operated effectively under their terms, and to identify if rationalising these contracts could result in savings.
  • Partnering with service providers to deliver long-term efficiencies in their adoption of IT systems, medical equipment, pharmacy, pathology, facilities management, support services and shared services.
  • Identifying income generation opportunities – including making the most of private patient income opportunities.
  • Investigating options for variation and refinancing of private finance initiatives (PFIs).

On the largest scale, a number of NHS providers have identified as clear objectives the need to modernise and redevelop their estates. Some are developing masterplans to determine how their estates can be redesigned and consolidated to make them fit for purpose and future-proofed in order to accommodate future changes in use. New facilities could help to reduce the burden of backlog maintenance and would deliver buildings with up to date IT infrastructure. Using building information modelling will help to deliver long-term maintenance efficiencies and savings. Many NHS providers are also looking closely at the performance and efficiency of their equipment in an effort to maintain optimum clinical and economic usage.

The key limiting factor for all this change is, of course, cost. Limited public funds are available for projects. Tight restrictions on capital funding available means that NHS providers are finding it necessary to defer capital projects that could make a real difference in the long term for the delivery of services to their patients. Future prospects do not look much better: the 2015 Spending Review has promised only a modest £500 million over five years to develop three named hospital sites, whilst Private Finance 2, the government’s successor to PFI, has failed to gain impetus.

Where will future money come from?

Whilst NHS providers could, in certain cases, seek to borrow directly from the government or the market to deliver new projects, it is clear that the government wishes to encourage “long term partnerships between the NHS and the private sector to modernise buildings, equipment and services, and deliver efficiencies…” (Press release: Department of Health’s settlement at the Spending Review 2015).

Accordingly, to deliver the changes and growth that would bring meaningful improvement for their services, NHS providers have been challenged to identify partners for the long term. For estates projects this may include investigating the long-term partnership options – including forms of strategic estates partnership – that may also help them to gain access to third party funding, in particular from overseas funds that are currently expressing increased interest in investing in the UK. NHS providers will also need to continue to assess their outsourcing and managed service arrangements options to determine how and where working with private sector partners, both domestic and international, can bring genuine long-term and mutual benefits.

It is clearly now essential to consider international inward investment options to fund projects with significant capital requirement. For example, we are actively working with some of the world’s largest international investment funds with healthcare divisions, and healthcare specialist real estate investment trusts, to identify investment opportunities in the UK.

Read other items in the Healthcare Brief - July 2016